What does ELI mean, and why is it different in Florida?

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What does ELI mean, and why is it different in Florida?

It means Extremely Low Income (ELI). Many housing programs utilize the income category. The U.S. Department of Housing and Urban Development (HUD) Office of Community Planning and Development (CPD), and Office of Public and Indian Housing (PIH), make frequent use of the income category in guidance issued to state and local government grantees, as well as Public Housing Authorities (PHAs).

For example, 100% of National Housing Trust Fund (NHTF) monies administered by the states must be used to serve ELI households in years when the total fund is less than $1 Billion. In public housing, no less than 40% of units which become available during the year must be made available to ELI households. When PHAs admit new families to the Housing Choice Voucher (HCV) program, at least 75% of the families admitted to the program during the course of a year must be ELI. As units become available in multifamily buildings assisted through project-based Section 8 programs (excluding PBVs), 40% must be made available to ELI families.

From 1998 through 2014, HUD defined ELI simply: families with incomes at or below 30% of Area Median Income (AMI)[1]. However, as part of its annual appropriations act of 2014, Congress directed HUD to update the definition and modify its ELI targeting in some programs. The change, describe in the Federal Register on June 25, 2014, defines an ELI family as one whose income does not exceed:

  • the Federal poverty level; or
  • 30% of AMI.[2]

The new definition helps families who live in places where the AMI itself is extremely low. As a relative measure, the previous definition punished households living in impoverished areas. The poverty level is a measure of absolute, rather than relative, need. Conceptually, a family living below the poverty level does not have sufficient income to sustain itself. The fact that the median household in the same geographic area is also poor should not exclude such families from housing assistance programs.

Why is it different in Florida?

Because, everything is different in Florida! The serious answer is that the Florida Housing Finance Corporation uses an adjusted ELI level to establish set-aside requirements. When the Corporation provides capital subsidies to developers, it often requires that a portion of the units be “deeply targeted” to ELI households. The rationale for this is straightforward. Rent levels at properties financed through the Low Income Housing Tax Credit (LIHTC) program are generally set at 30% of the household-size-adjusted maximum income allowed under the program.[3] By definition, an ELI household has an income half that of a household at the maximum of LIHTC eligibility. An ELI family faces a potential rent burden equal to 60% of its total income in a tax credit unit. Therefore, in order to get the credit, or additional subsidies through the State Apartment Incentive Loan (SAIL) program, the Corporation requires developers to set-aside some of its units for ELI households at more affordable rents.

But why is the ELI level different?  

The Corporation requires developers to set-aside units for households at an ELI level which varies by county. The level can be greater than or less than 30% of AMI. Florida Statute 420.0004(9) adopts HUD’s ELI definition, but empowers the Corporation to adjust the threshold by rule. In 67-48.002(39) of the Florida Administrative Code, the Corporation repeats the definition. In actual practice, the Corporation determines the full-time income of a person earning the current minimum wage as an approximate proportion of the median income for each county. The results vary widely and reflect the economic geography of the state. For example, the ELI level in Broward County is 28% of AMI; in rural North Florida (e.g. Union County, Levy County, and Jackson County) it is 45% of AMI.

This is an area in which Florida has been a leader in housing policy. The Corporation’s approach to allocating competitive resources has long recognized economic variation across the state. The county-adjusted ELI level is perhaps the most elegant illustration of this forward thinking. At the federal level, HUD has only recently begun to utilize more fine-grained geographies through Small Area Fair Market Rents (SAFMRs) and Small Area Difficult Development Areas (SDDAs).  The county is a very coarse geography for this purpose. Hopefully the Corporation will update its approach, now that it is using more advanced GIS tools.

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[1] Already in use in academic literature, Congress established the new income standard as part of the Quality Housing and Work Responsibility Act (HWRA) of 1998. The new standard more narrowly focused housing assistance within the Very Low Income (VLI) category introduced as part of Housing and Community Development Act of 1974.

[2] For the curious:  Area Median Income, as we are using the phrase here, is determined by HUD’s Office of Policy Development and Research (PD&R)  using the geographic area definitions developed by the White House Office of Management and Budget (OMB) and data from the American Community Survey (ACS). The poverty guidelines refered to here are developed by the U.S. Department of Health and Human Services (HHS).

[3] Under Section 42 of the Internal Revenue Code, LIHTC properties must serve households with incomes at or below 60% of AMI.